Construction-Oriented CPA Plays Key Role for Contractors

This put up is a part of a collection sponsored by Outdated Republic Surety.

In the event you’re an impartial agent with development contractor purchasers, right here’s an article to share with them about accounting finest practices. When your contractor shopper requests your assist — as surety firms suggest that they do — be ready with each bonding and accounting recommendation.

We regularly hear contractors say that getting a job is the exhausting half — finishing the challenge is the straightforward half. Many elements go into that, considered one of which is having correct accounting in place.

Whether or not it’s pricing a job, financing new gear or assembly payroll, a development firm should perceive its numbers to achieve success. Correct accounting is a vital administration device that may’t be missed. Contractors want strong monetary reporting to precisely monitor bills, acknowledge income and handle their money move.

Accounting that grows with your corporation

Your accounting wants most likely had been pretty easy whenever you began your corporation. You may need run your organization strictly on a money foundation. Because the agency expanded, you seemingly moved to a type of accrual accounting.

As you search bigger and extra advanced initiatives, you could want a construction-oriented CPA that can assist you swap to the percentage-of-completion technique, which acknowledges income and bills based mostly on the proportion of a job you’ve accomplished. With a percentage-of-completion assertion, and accompanying notes and financials, you’ll be able to acquire wanted surety credit score for bigger initiatives.

Working with construction-oriented CPA agency places you forward of the sport — and primed to get bigger surety bonds authorised whenever you want them. Listed here are 5 the explanation why it’s best to rent a CPA agency with development expertise that can assist you develop your agency:

1. Development accounting is specialised. Simply as contractors focus on various kinds of development, CPAs have specialties, too. A CPA with development trade expertise will perceive your corporation and have the opportunity that can assist you allocate job bills, keep a wholesome money steadiness, decrease borrowing and forestall revenue fading. A construction-oriented CPA can assist determine the drivers of your organization’s revenue, analyze your prices, and perceive why a challenge is perhaps behind. Most necessary, these CPAs perceive methods to put together the monetary statements you’ll have to submit for bonding.
2. A CPA can assist you receive greater ranges of bonding and credit score. The upper the consolation degree a surety firm or lender has with the monetary data you present, the additional it’s prepared to stretch to satisfy your bonding or credit score wants. Development CPAs perceive the rules generally utilized by surety underwriters to find out bonding. In addition they can provide recommendation on structuring massive transactions — similar to capital asset purchases, debt financing and fairness transactions — to maximise bonding capability.
3. A CPA assertion will lead to sooner surety selections and better ease of doing enterprise. Greater than anything, sureties need to see correct and well timed details about your agency’s operations. A press release from a CPA agency that the surety is aware of and trusts — one on the percentage-of-completion foundation with applicable schedules and notes — will make the method go smoother. The extra dependable the data, the faster turnaround time out of your underwriter. A very good CPA agency ensures your monetary statements embody the disclosures and supplementary data that underwriters search for, even when it isn’t technically required by GAAP accounting guidelines.
4. Growing a relationship with a CPA pays off in professional monetary recommendation all year long. A very good CPA is sort of a associate, advising you on money move, recognition of income and credit score wants. Your CPA can assist you perceive your monetary statements and quarterly studies; monitor billings and backlogs; and steadiness your revenue and progress wants with tax-minimization methods.
5. Stable financials turn into instruments for higher administration. Sensible contractors perceive {that a} CPA’s report generally is a gold mine of data. These are important instruments for monitoring your organization’s monetary situation. CPAs ask questions designed to identify tendencies and enhance operations. The solutions will provide help to turn into extra environment friendly, enhance your workflow and enhance your profitability. It’s necessary so that you can rent a CPA agency that can dig into your corporation and be accessible to repeatedly seek the advice of with you.

Get a advice out of your agent or surety

Guidelines governing income recognition (ASC 606) modified lately, making it important that you just discover a CPA agency skilled in development accounting. A very good development CPA ought to be capable to clarify how the brand new guidelines will influence your monetary statements, together with work-in-progress statements and liquidated damages. Ask your agent or Outdated Republic department workplace for a advice. They need to know CPA companies in your space with a popularity for doing strong work and offering correct statements that conform to surety underwriting requirements.

Able to take your corporation to the subsequent degree? Partnering with a CPA agency with development expertise is a brilliant first step. The sooner you start to improve your monetary home, the higher ready you’ll be for future progress and success.

If you need extra details about having a trusted adviser, WIP schedules, utilizing a development oriented CPA or anything associated to surety bonding, please try the Outdated Republic Surety contract bond video collection.

Subjects
Development
Contractors